By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®
When you see the words unexpected money you may conjure a vision of the person who wins the lottery and overnight, their dreams have come true. Certainly, this is one way to come into a large sum of unexpected money. More commonly though, people who receive sizeable amounts of money do so through a divorce, a settlement from a law suit, life insurance proceeds from the death of a loved one, an inheritance, the sale of real estate, a business or other investment, receiving a severance, their retirement package, or cashing in their stock options.
We are used to receiving our money gradually. That is, we receive income and build our net worth over time. Accepting a large sum of money all at once is very different. You’ve now received a great amount of money all at once – more than you are used to being responsible for. This may stir up many emotions: excitement, fear, stress and anxiety, or a general sense of being overwhelmed. We’ve all heard stories of the person who won the lottery only to find that a few short years later, they are broke. Or, the person who received an inheritance who didn’t have a plan or a clear direction for the money, and before they know it, it is gone.
If you’ve received a large sum of money in a short period of time, the most important thing you need to have is a plan. Otherwise, you may find that your unexpected money is unimaginably gone. Carefully think through what is most important to you over the short term AND the long term. Before you spend money for short term items be certain that you are leaving enough to fund your longer-term goals, particularly if that goal includes creating a future income stream. Judiciously calculate the amount of money, the time value of money, and future withdrawal rate to determine how long your money will last. Remember to include inflation and taxation into your equation, as they can be powerful influences on the future value of your money. Carefully assess the risks associated with any investment before you commit your money. Risks can occur in many ways: loss of principal, exposure to liability, how you title an account, or illiquidity of your investment, just to name a few. Finally, having proper expectations for your investment choices is critically important. Remember, the decisions that you make today can mean the difference between whether or not your plan is fulfilled for your tomorrows.
LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or email@example.com. www.SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for an individual.